* U.S. dollar lower but remains near 16-month high (Updates prices, market activity, comment to close of U.S. markets)

NEW YORK, Nov 13 (Reuters) - Oil prices plunged 7 percent on Tuesday on persistent concerns of oversupply and weakening global demand, causing Wall Street stocks to reverse early gains that were driven by the resumption of trade talks between the United States and China.

The U.S. benchmark S&P 500 stock index ended lower as energy stocks declined with the fall in prices of Brent and U.S. crude futures.

U.S. crude touched its lowest level in a year, and Brent also extended Monday's fall, which was triggered when U.S. President Donald Trump put pressure on OPEC to not cut supply to prop up prices. Both crude benchmarks have fallen more than 20 percent since peaking at four-year highs in early October.

Wall Street stocks reacted sharply to the oil price slump.

"The market does not like such a violent move in an asset class," said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta. "Low oil prices are good for consumers, but they will hurt energy companies, whose earnings estimates have been rising over the past year," he added, nothing that there could also be a decline in capital spending.

U.S. crude futures settled down $4.24, or 7.1 percent, to $55.69 a barrel. It was the largest one-day percentage decline for the contract since September 2015. Brent ended down $4.65, or 6.6 percent, to $65.47 a barrel, its largest one-day loss since July.

Earlier, U.S. stocks rose after White House economic adviser Larry Kudlow said Washington had resumed trade talks with China, calling the development "very positive."

The U.S. dollar index, which has steadily climbed as the U.S.-China trade dispute has escalated, dipped 0.2 percent but remained near a 16-month high reached on Monday.

"If you're looking at market action today, that reflects an unsuredness and lack of direction," said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.

The pound rose 0.9 percent to $1.2966 after reports that Britain and the European Union had agreed upon the text of a Brexit agreement and that British Prime Minister Theresa May would hold a cabinet meeting on Wednesday.

The euro rose from a 16-month low, last up 0.6 percent to $1.1284.

The Dow Jones Industrial Average fell 100.69 points, or 0.4 percent, to 25,286.49, the S&P 500 lost 4.04 points, or 0.15 percent, to 2,722.18, and the Nasdaq Composite added 0.01 point, or 0 percent, to 7,200.88.

MSCI's gauge of stocks across the globe shed 0.10 percent.

In the U.S. Treasuries market, benchmark 10-year notes last rose 13/32 in price to yield 3.1433 percent, from 3.189 percent late on Friday. The Treasury market was closed on Monday for the Veterans Day holiday. (Reporting by April Joyner; Additional reporting by David Gaffen and Stephen Culp in New York and Tom Finn and Marc Jones in London; Editing by Cynthia Osterman and Leslie Adler)